Pass necessary journal entries for the following transactions on the dissolution of the firm P and Q after the various assets (other than cash) and outside liabilities have been transferred to Realisation Account:
(a) Bank Loan ₹ 12,000 was paid.
(b) Stock worth ₹ 16,000 was taken over by partner Q.
(c) Partner P paid a creditor ₹ 4,000.
(d) An asset not appearing in the books of accounts realised ₹ 1,200.
(e) Expenses of realisation ₹ 2,000 were paid by partner Q.
(f) Profit on realisation ₹ 36,000 was distributed between P and Q in 5 : 4 ratio.
Answers
Answer:
As per the journal,
(A) An amount of Rs. 12,000 has been debited from the Realisation account and it has been credited to Bank A/c.
This is being the bank loan paid at the time of dissolution.
(B) An amount of Rs. 16,00 has been debited from the Q's capital account and it has been credited to the Realisation A/c
This is being the amount by which the stock taken over by the Q.
(C) An amount of Rs. 4000 has been debited from the Realisation account and it has been credited to the P's capital A/c
This is being 5% commission allowed to X's on sale of assets of Rs. 50000
(D) An amount of Rs. 1,200 has been debited from the Bank account and it has been credited to the Realisation A/c
This is being the unrecorded assets which are realized.
(E) An amount of Rs. 2000 has been debited from the Realisation account and it has been credited to the Q's capital A/c
This is being the amount by which the bad debts had been recovered.
(E) An amount of Rs. 36000 has been debited from the Realisation A/c and it has been credited to the P and Q's Capital A/c of Rs. 20000 and Rs. 16000 respectively.
This is being the amount by which the realisation profit distributed.
